09 Oct Anti-money laundering (AML): Don’t be offended if we ask for ID
You may or may not have heard of the new AML (anti-money laundering) regulations that have come into play for the real estate industry from the 1st of January 2019. These regulations give agents obligations around information gathering and reporting suspicious activity.
Why have these rules been introduced?
As the name suggests, the premise behind it is stopping the laundering of money through real estate transactions. Overseas criminals seeking to mask their illicit funds are laundering an estimated $1.35 billion at least through New Zealand each year, according to the boss of the New Zealand Police’s Financial Intelligence Unit (FIU).
For 99.9 percent of us these new regulations are merely a little bit of extra paperwork, however, real estate being a large money transaction is an ideal place for a little suspicious activity.
So how would one fall foul of these regulations?
There are many ways money can be cleaned through real estate transactions including but not limited to:
- Using illicit funds to pay for renovations on the property increasing the value and integrating the dirty money into the system. The home can then be sold for a profit.
- Using third parties to buy property allowing criminals to sit behind the scenes
- Using smaller cash deposits via various banks (not triggering thresholds) to obtain bank cheques and buy real estate
- ‘Renting’ out their own properties that have been brought via third parties disguising illicit/dirty funds. They can also provide tenants with illicit funds to cover rental payments. This gets the dirty money in the system.
- Criminals can distance themselves by using trusts and shell companies to buy property
What does this mean for you?
When signing up a listing nowadays we will need a minimum of verification of your ID and proof of address. So, when we ask for your identification be assured, we are not checking your age but just staying within the regulations. 😊
If you are thinking of selling your chosen agent will be able to steer you in the right direction regarding what you will need to provide as it changes depending on the ownership structure.